Using Insurance to Pay for Treatment

As societal and scientific understandings of mental health and substance abuse have grown, beliefs that such conditions require the money and time to be properly and justifiably treated have grown strong as well. 

Today, using health insurance to pay for rehab services is a possibility for the millions of people who need professional help for their conditions.

The Need for Insurance

The National Alliance on Mental Illness estimates that nearly 20 percent of the American population (43.7 million people) struggle with a mental illness, such as bipolar disorder or major depressive disorder, in a year. Over 13 million people have such severe symptoms that it affects major life activities, which could be as simple as day-to-day behaviors and obligations. Of the 20.7 million Americans who have a substance abuse disorder, almost 40.7 percent of them had a co-occurring disorder, which is the simultaneous presentation of a mental health disorder.

Mental health and substance abuse disorders are not conditions that only affect the poor, the unemployed, or people from certain social or ethnic demographics. Through dozens of risk factors (age, gender, family history, chronic pain, level of stress, access to drugs, etc.), all working in different combinations and balances, anyone can experience a mental health issue and a substance abuse problem.

The Mental Health Parity and Addiction Equity Act

That is why, in 2008, the Mental Health Parity Act (originally signed into law by President Bill Clinton in 1996) was replaced by the Mental Health Parity and Addiction Equity Act, which ensured that substance abuse disorders were given the same insurance limitations as those of medical and/or surgical benefits.

This was vitally important, because the Mental Health Parity Act did not require employers and insurers to offer any coverage for substance abuse matters; it allowed employers and insurers to adhere to the act with only the minimum amount of coverage. For instance, even though major depression can be a lifelong illness, plans under the Mental Health Parity Act only covered 10 therapy visits. Furthermore, insurers could legally charge a higher copayment for outpatient mental health visits than for an outpatient visit for a physical condition.

Such imbalances were addressed by the passage of the Mental Health Parity and Addiction Equity Act, which legally requires insurance companies to consider the financial requirements of mental health and substance abuse treatment in the same way that they would consider the expenses of medical or surgical coverage. Additionally, non-financial treatment limits are also covered by the parity law, which removes restrictions on how many times a person sees a therapist in a set period of time (but still allows the insurance company to place limitations based on “medical necessity”).

As an example, a stay of more than two consecutive days at a hospital or an accredited treatment facility would qualify for inpatient status, which would have a significantly different bearing on insurance coverage than an outpatient stay. The official Medicare website explains that a written note from the person’s doctor explaining the medical necessity of being admitted for inpatient treatment might be what allows the person’s duration of stay to be covered by his or her insurance plan.

The Equity Act covers health plans like the Children’s Health Insurance Program, most Medicaid programs (based on individual programs and states), coverage purchased through health insurance exchanges implemented by the Affordable Care Act, and employer-sponsored health coverage for organizations that hire 50 or more employees.

The Mental Health Parity and Addiction Equity Act does not require insurers to provide coverage for mental health and substance abuse disorders; instead, it says that if insurers do offer plans for such conditions, then those plans have to offer the same kind of coverage for medical or surgical cases.

Nonetheless, only 4 percent of Americans even know that the Act exists, according to a 2014 survey conducted by the American Psychological Association. The Association quotes the Substance Abuse and Mental Health Services Administration as saying that mental health disorders are the number one cause of disability in both the United States and Canada. Notwithstanding that, almost 11 million Americans have unmet mental health needs, even though insurance and legislation are in place to help them. The Substance Abuse and Mental Health Services Administration writes that the Equity Act and the Affordable Care Act have not only helped 60 million people get access to the healthcare they need; they have created state and local programs that offer teaching and learning resources about mental health and the prevention of mental illnesses.

Medical Necessity

The amount of treatment covered by individual insurance policies can range widely, but they will mostly cover the following:

  • Intake and assessment (which will determine how much treatment is required and how much will be covered by an insurance plan)
  • Detoxification (practices like rapid detox may not be covered because of their controversial methods and results)
  • Outpatient treatment
  • Inpatient treatment

As stated, mental health and addiction treatment will be covered to the same extent that other medical or surgical treatments are covered, no more and no less. However, in order to receive coverage, treatment will have to be deemed medically necessary by a licensed healthcare practitioner.

The concept of medical necessity, which has already been mentioned, is defined by the official website of the Affordable Care Act as a service that is needed to diagnose and treat a condition, a disease or the symptoms thereof, that meets accepted standards of care. Such standards will include the basics of treatment and a bed, but anything beyond what is considered necessary for treatment will likely not meet the criteria.

Alternatives to Using Insurance to Pay for Treatment

Of course, even with all the legal and financial advancements made in treating mental health and addiction disorders, not everyone has access to health insurance. Fortunately, there are a number of options available to people across the payment spectrum, to ensure that they can still get access to the healthcare and treatment they need.
One such option is payment plans. The client (or family or friends) can pay a set amount every month, over a prearranged period of time, that will cover the cost of treatment when the period of time is over. The set amount to be paid, as well as the period of time over which the amount will be paid, is determined by the nature of treatment (how much it costs), as well as the financial situation of the client (and/or family or whoever is footing the bill).

A second option is a sliding scale, where the treatment center calculates a scale of payment based on the client’s ability to pay the bill. The advantage of a sliding scale is that it allows the client to pay what is possible in a way that is flexible and feasible for the individual. As with a payment plan, the client will have to demonstrate suitable financial hardship, by filling out paperwork, submitting evidence, or otherwise showing an inability to pay for the treatment.

Other options of paying for treatment might include:

  • Credit cards
  • Personal loans
  • Specialized loan companies
  • Healthcare credit cards
  • Home equity loans

All these methods, however, entail the client paying back creditors and usually with interest.

Some treatment centers offer “scholarships,” wherein the center will cover part, or even all, of the client’s treatment costs. In 2013, TIME magazine reported on a mental health clinic in Albuquerque, New Mexico, that created a program for local, adult-aged residents, who, instead of paying for admission, had to write essays describing their addictions and their sincere desires for recovery.

Lastly, free rehab programs do exist, but these are rare and usually the purview of religious organizations. They typically do not require the person to be a believer of the respective faith, but admission into such a program would entail participating in religious rituals that are seen as treatment exercises (such as group prayer, music worship services, etc.).

About The Contributor
Editorial Staff
Editorial Staff, American Addiction Centers
The editorial staff of Greenhouse Treatment Center is comprised of addiction content experts from American Addiction Centers. Our editors and medical reviewers have over a decade of cumulative experience in medical content editing and have reviewed... Read More